Cabot Options Institute Fundamentals - Alert (WBA, INTC)
Dogs of the Dow Portfolio Alert (WBA, INTC)
Walgreens Boots Alliance (WBA)
Our WBA calls are worthless and due to expire. As a result, let’s buy back our short calls and immediately sell more call premium.
We currently own the WBA January 17, 2025, 25 call LEAPS contract at $11.10. You must own LEAPS in order to use this strategy.
If you are new to the position, based on our approach, the LEAPS contract that works best is the one with a current delta of roughly 0.80: the January 16, 2026, 15 calls.
We typically initiate a LEAPS position, with a delta of roughly 0.80, that has about 18 to 24 months left until expiration.
WBA is currently trading for 21.38.
Here is the trade (you must own LEAPS prior to making the trade below):
Buy to close WBA October 20, 2023, 27.5 call for roughly $0.01 (adjust accordingly, prices may vary from time of alert).
Once that occurs:
Sell to open WBA December 1, 2023, 23 call for roughly $0.34 (adjust accordingly, prices may vary from time of alert).
Premium received: 3.1%
Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $11.10 (or the price at which you purchased your LEAPS) with each and every transaction.
We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in WBA.
Intel (INTC)
Our Small Dogs of the Dow portfolio continues to push higher. More specifically, our INTC position is up 75% since we initiated it back at the beginning of 2023. The underlying stock position is only up 25%, again, showing the power of using a poor man’s covered call strategy on individual stocks and ETFs.
We currently own the INTC January 17, 2025, 17.5 call LEAPS contract at $11.40. You must own LEAPS in order to use this strategy.
*If you are new to the position, based on our approach, the LEAPS contract that works best is the one with a current delta of roughly 0.80: the January 16, 2026, 28 calls.
We typically initiate a LEAPS position, with a delta of roughly 0.80, that has about 18 to 24 months left until expiration.
INTC is currently trading for 35.29.
Here is the trade:
Buy to close the INTC October 20, 2023, 37 call for roughly $0.01. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs (or if you are new to the position and already own LEAPS):
Sell to open the INTC November 17, 2023, 38 call for roughly $0.76. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 6.7%
Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $11.40 (or the price at which you purchased your LEAPS) with each and every transaction.
We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in INTC.
